Zimbabwe’s indigenisation policy, which requires a 51 percent local ownership of all foreign-owned companies with a value of more than $500 000, is not an impediment to foreign direct investment at all because for FDI to make more sense, it has to partner local direct investment.
This was said by Indigenisation Minister Patrick Zhuwao in an interview with The Herald following his meeting with Finance Minister Patrick Chinamasa on Monday at which they agreed on the way forward on one of Zimbabwe’s most controversial laws.
The law has been blamed for the low FDI in Zimbabwe which lags way behind its regional neighbours.
“I am an economist and I have been able to also articulate my economic views to the Minister of Finance and the Governor of the Reserve Bank, and if you listened to what they have said, they also agree with me that FDI can only work where it fits in with domestic investment,” Zhuwao said.
“And in my view I need to put in place measures that allow for the further indigenisation of the economy by making sure that indigenous Zimbabweans are also able to invest within that particular economy.
“I want to say this taking into consideration a report that was done by the United Nations Conference on Trade and Development (UNCTAD) in 2013, which identified that FDI does not provide benefits to an economy if there is no base of local investment within that economy. And I think we are agreed with the monetary and fiscal authorities that for FDI to make more effective sense we also need to make sure that it comes in to partner with local direct investment.”